Official nudging works. Now, do more with it

Last Wednesday was a historic day for behavioural science. The White House released the annual report of its Social and Behavioural Sciences Team. The United Kingdom's Behavioural Insights Team released its own annual report on the same day. With the recent creation of similar teams in Australia, Germany, the Netherlands and Qatar, the two reports deserve careful attention.

Outlining dozens of initiatives, the reports offer two general lessons about uses of behavioural science by governments. First, both teams are enlisting behavioural science not for controversial purposes, but to encourage people to benefit from public programmes and to comply with the law. Second, governments are constantly testing the tools to see whether they actually work.

For a simple example of what has been happening, consider an initiative from the United States behavioural science team, designed to increase retirement saving by military service members. While about 87 per cent of civilian federal employees are enrolled in the national Thrift Savings Plan, the same is true for just 44 per cent of military service members - raising the risk that they will face serious economic problems in retirement.

Working with the US Department of Defence, the team tried a pilot programme in which service members were specifically asked, upon arriving at a new military base, whether they wanted to contribute to the savings plan. The result was impressive: Enrolment increased by 8.3 percentage points. An initiative starting in 2018 will automatically enrol service members (while making it simple to opt out) - a proven method for increasing enrolment.

Other recent initiatives involve the use of reminders. For example, the US Department of Education helps student borrowers to use repayment plans that link monthly payments to income, a big advantage for low-income borrowers.

But borrowers need to provide the government updated information each year if they want to keep using those income-based plans. To avoid monthly payment increases, the department (working with the Social and Behavioural Sciences Team) reminded about 300,000 borrowers to provide that information - and the share of people who did so increased by 8 per cent.

Meanwhile, the UK team has a terrific mantra for helping people to interact with government: "Make it easy." To promote tax compliance by corporations that had incurred a tax debt for the first time, the team sent letters emphasising that mistakes in filing are a main reason for corporate tax debts, and outlining simple tips to make correct payments easier. All by itself, the letter raised payment rates by 6 percentage points.

The US team used a similar approach to help farmers get small loans.

Working with the US Department of Agriculture, it sent letters to farmers explaining how to apply and offering personalised contact information for local loan officers. The letters significantly raised the percentage of farmers who ultimately obtained loans.

Some of the recent initiatives take advantage of the well-established finding that most people do not like to flout social norms. For example, the UK has been concerned with an increase in antimicrobial resistance stemming from overprescription of antibiotics. The UK behavioural insights team sent a letter to doctors who prescribed antibiotics at unusually high rates, noting that their peers were showing greater restraint. Over six months, those who received the letter reduced their antibiotic prescription rates by 3.3 per cent (eliminating more than 73,000 prescriptions).

Many of the ideas behind the two reports are captured in a guidance document from Dr John Holdren, President Barack Obama's Science Adviser. He asks federal agencies to consider streamlining processes for enrolling in programmes, simplifying forms, automatically enrolling eligible individuals, making information more salient, and using social comparisons (by informing people about the behaviour of their peers).

Both the American and British teams offer some impressive findings, and their reports should dispel the concern that officials are using behavioural science for nefarious ends or to manipulate people. But it is tempting to respond that the reports are limited to valuable but relatively small-scale stuff - initiatives that increase, usually by a few percentage points, the number of people who are receiving benefits or complying with the law.

That's not an unfair response. While behavioural science has informed some major initiatives from the Obama administration, we could see an increased effort to make a dent in the most serious policy problems.

There is growing evidence that behaviourally informed approaches can help officials to tackle the largest challenges, including persistent poverty, inadequate education, climate change and crime.

In the coming years, behavioural science teams within governments should devote their attention to problems of that magnitude.

BLOOMBERG VIEW

A version of this article appeared in the print edition of The Straits Times on September 23, 2016, with the headline 'Official nudging works. Now, do more with it'. Print Edition | Subscribe